Exhibit 10(viii)
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer:
Policy Number:
Bank: Carolina Bank
Insured:
Relationship of Insured to Bank: Executive
Trust: Rabbi Trust for the Executive Supplemental
Retirement Plan Agreement and the Life
Insurance Endorsement Method Split Dollar
Plan Agreement
The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:
I. DEFINITIONS
Refer to the policy contract for the definition of any terms in this
Agreement that are not defined herein. If a definition of a term in the
policy is inconsistent with the definition of a term in this Agreement,
then the definition of the term as set forth in this Agreement shall
supersede and replace the definition of the terms as set forth in the
policy.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Trustee for the Rabbi Trust for the
Executive Supplemental Retirement Plan Agreement and the Life Insurance
Endorsement Method Split Dollar Plan Agreement for its use and for the use
of the Insured all in accordance with this Agreement. The Trustee at the
direction of the Bank may, to the extent of its interest, exercise the
right to borrow or withdraw on the policy cash values. Where the Trustee at
the direction of the Bank and the Insured (or assignee, with the consent of
the Insured) mutually agree
to exercise the right to increase the coverage under the subject Split
Dollar policy, then, in such event, the rights, duties and benefits of the
parties to such increased coverage shall continue to be subject to the
terms of this Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive the Insured's share of the proceeds
payable upon the death of the Insured, and to elect and change a payment
option for such beneficiary, subject to any right or interest the Trustee
at the direction of the Bank or the Trust may have in such proceeds, as
provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
The Bank or the Trustee at the direction of the Bank shall pay an amount
equal to the planned premiums and any other premium payments that might
become necessary to keep the policy in force.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the assumed
cost of insurance as required by the Internal Revenue Service. The Bank or
the Trustee at the direction of the Bank will report to the Insured the
amount of imputed income each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraphs VII and IX herein, the division of the death proceeds
of the policy is as follows:
A. Should the Insured be employed by the Bank at the time of death, the
Insured's beneficiary(ies), designated in accordance with Paragraph
III, shall be entitled to an amount equal to eighty percent (80%) of
the net-at-risk insurance portion of the proceeds. The net-at-risk
insurance portion is the total proceeds less the cash value of the
policy.
B. Should the Insured not be employed by the Bank at the time of his or
her death for reasons other than disability the Insured's
beneficiary(ies), designated in accordance with Paragraph III, shall
be entitled to the percentage as set forth hereinbelow of the proceeds
described in Subparagraph VI (A) above that corresponds to the number
of full years the Insured has been employed by the Bank since the date
of first employment and the age of Insured while employed by the Bank
only.
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Total Years of
Employment and Age of
Executive while employed Vested Percentage
by the Bank only (to a maximum of 75%)
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1-10 and prior to 7.5% per year
attaining age 62 while to a maximum of 75%
employed by the Bank only
Age 62 while employed 100% and the provisions of
by the Bank only Subparagraph VI (A) would apply
C. The Bank shall be entitled to the remainder of such proceeds.
D. The Bank and the Insured (or assignees) shall share in any interest
due on the death proceeds on a pro rata basis as the proceeds due each
respectively bears to the total proceeds, excluding any such interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
The Bank or the Trust shall at all times be entitled to an amount equal to
the policy's cash value, as that term is defined in the policy contract,
less any policy loans and unpaid interest or cash withdrawals previously
incurred by the Bank or the Trustee at the direction of the Bank and any
applicable surrender charges. Such cash value shall be determined as of the
date of surrender or death as the case may be.
VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's or the Trust' right and interest in any endowment proceeds or
annuity benefits, on expiration of the deferment period, shall be
determined under the provisions of this Agreement by regarding such
endowment proceeds or the commuted value of such annuity benefits as the
policy's cash value. Such endowment proceeds or annuity benefits shall be
considered to be like death proceeds for the purposes of division under
this Agreement.
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall be discharged from employment with the Bank for
cause. The term "for cause" shall mean any of the following that
result in
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an adverse effect on the Bank: (i) gross negligence or gross neglect;
(ii) the commission of a felony or gross misdemeanor involving moral
turpitude, fraud, or dishonesty; (iii) the willful violation of any
law, rule, or regulation (other than a traffic violation or similar
offense); (iv) an intentional failure to perform stated duties; or (v)
a breach of fiduciary duty involving personal profit; or
B. Surrender, lapse, or other termination of the Policy by the Bank.
Upon such termination, the Insured (or assignee) shall have a fifteen (15)
day option to receive from the Bank or the Trustee at the direction of the
Bank an absolute assignment of the policy in consideration of a cash
payment to the Bank or the Trustee at the direction of the Bank, whereupon
this Agreement shall terminate. Such cash payment referred to hereinabove
shall be the greater of:
A. The Bank's or the Trust' share of the cash value of the policy on the
date of such assignment, as defined in this Agreement; or
B. The amount of the premiums which have been paid by the Bank or the
Trustee at the direction of the Bank prior to the date of such
assignment.
If, within said fifteen (15) day period, the Insured fails to exercise said
option, fails to procure the entire aforestated cash payment, or dies, then
the option shall terminate and the Insured (or assignee) agrees that all of
the Insured's rights, interest and claims in the policy shall terminate as
of the date of the termination of this Agreement.
The Insured expressly agrees that this Agreement shall constitute
sufficient written notice to the Insured of the Insured's option to receive
an absolute assignment of the policy as set forth herein.
Except as provided above, this Agreement shall terminate upon distribution
of the death benefit proceeds in accordance with Paragraph VI above.
X. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign to any
individual, trust or other organization, any right, title or interest in
the subject policy nor any rights, options, privileges or duties created
under this Agreement.
XI. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank or the Trustee at the
direction of the Bank, their heirs, successors, personal representatives
and assigns.
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XII. ERISA PROVISIONS
The following provisions are part of this Agreement and are intended to
meet the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"):
A. Named Fiduciary and Plan Administrator.
The "Named Fiduciary and Plan Administrator" of this Endorsement
Method Split Dollar Agreement shall be Carolina Bank until its
resignation or removal by the Board of Directors. As Named Fiduciary
and Plan Administrator, the Bank or the Trustee at the direction of
the Bank shall be responsible for the management, control, and
administration of this Split Dollar Plan as established herein. The
Named Fiduciary may delegate to others certain aspects of the
management and operation responsibilities of the Plan, including the
employment of advisors and the delegation of any ministerial duties to
qualified individuals.
B. Funding Policy.
The funding policy for this Split Dollar Plan shall be to maintain the
subject policy in force by paying, when due, all premiums required.
C. Basis of Payment of Benefits.
Direct payment by the Insurer is the basis of payment of benefits
under this Agreement, with those benefits in turn being based on the
payment of premiums as provided in this Agreement.
D. Claim Procedures.
Claim forms or claim information as to the subject policy can be
obtained by contacting Benmark, Inc. (800-544-6079). When the Named
Fiduciary has a claim which may be covered under the provisions
described in the insurance policy, they should contact the office
named above, and they will either complete a claim form and forward it
to an authorized representative of the Insurer or advise the named
Fiduciary what further requirements are necessary. The Insurer will
evaluate and make a decision as to payment. If the claim is payable, a
benefit check will be issued in accordance with the terms of this
Agreement.
In the event that a claim is not eligible under the policy, the
Insurer will notify the Named Fiduciary of the denial pursuant to the
requirements under the terms of the policy. If the Named Fiduciary is
dissatisfied with
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the denial of the claim and wishes to contest such claim denial, they
should contact the office named above and they will assist in making
an inquiry to the Insurer. All objections to the Insurer's actions
should be in writing and submitted to the office named above for
transmittal to the Insurer.
XIII. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will respect
the rights of the parties as herein developed upon receiving an executed
copy of this Agreement. Payment or other performance in accordance with the
policy provisions shall fully discharge the Insurer from any and all
liability.
XV. CHANGE OF CONTROL
Change of Control shall be deemed to be the cumulative transfer of more
than fifty percent (50%) of the voting stock of the Bank from the date of
this Agreement. For the purposes of this Agreement, transfers on account of
death or gifts, transfers between family members, or transfers to a
qualified retirement plan maintained by the Bank shall not be considered in
determining whether there has been a Change of Control. Upon a Change of
Control, if the Insured's employment is subsequently terminated, except for
cause, then the Insured shall be one hundred percent (100%) vested in the
benefits promised in this Agreement and, therefore, upon the death of the
Insured, the Insured's beneficiary(ies) (designated in accordance with
Paragraph III) shall receive the death benefit provided herein as if the
Insured had died while employed by the Bank (See Subparagraph VI [A]).
XVI. AMENDMENT OR REVOCATION
It is agreed by and between the parties hereto that, during the lifetime of
the Insured, this Agreement may be amended or revoked at any time or times,
in whole or in part, by the mutual written consent of the Insured and the
Bank.
XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be December 24, 2002.
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XVIII. SEVERABILITY AND INTERPRETATION
If a provision of this Agreement is held to be invalid or unenforceable,
the remaining provisions shall nonetheless be enforceable according to
their terms. Further, in the event that any provision is held to be over
broad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable
according to law and enforced as amended.
XIX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by the
laws of the State of North Carolina.
Executed at Greensboro, North Carolina this day of , 2003.
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CAROLINA BANK
Greensboro, North Carolina
By:
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Witness Title
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Witness Insured
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BENEFICIARY DESIGNATION FORM
FOR THE LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
I. PRIMARY DESIGNATION
(You may refer to the beneficiary designation information prior to
completion.)
A. Person(s) as a Primary Designation:
(Please indicate the percentage for each beneficiary.)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
B. Estate as a Primary Designation:
My Primary Beneficiary is The Estate of
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as set forth in the last will and testament dated the day of
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, and any codicils thereto.
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C. Trust as a Primary Designation:
Name of the Trust:
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Execution Date of the Trust: / /
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Name of the Trustee:
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Beneficiary(ies)of the Trust (please indicate the percentage for each
beneficiary):
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Is this an Irrevocable Life Insurance Trust? Yes No
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(If yes and this designation is for a Split Dollar agreement, an Assignment
of Rights form should be completed.)
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II. SECONDARY (CONTINGENT) DESIGNATION
A. Person(s) as a Secondary (Contingent) Designation:
(Please indicate the percentage for each beneficiary.)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
Name Relationship / %
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Address:
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(Street) (City) (State) (Zip)
B. Estate as a Secondary (Contingent) Designation:
My Secondary Beneficiary is The Estate of
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as set forth in the last will and testament dated the day of
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, and any codicils thereto.
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C. Trust as a Secondary (Contingent) Designation:
Name of the Trust:
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Execution Date of the Trust: / /
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Name of the Trustee:
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Beneficiary(ies)of the Trust (please indicate the percentage for each
beneficiary):
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All sums payable under the Life Insurance Endorsement Method Split Dollar
Plan Agreement by reason of my death shall be paid to the Primary
Beneficiary(ies), if he or she survives me, and if no Primary
Beneficiary(ies) shall survive me, then to the Secondary (Contingent)
Beneficiary(ies). This beneficiary designation is valid until the
participant notifies the bank in writing.
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Participant Date
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